At its January 26 meeting, the PTCA Board of Directors approved a budget for 2015/16. Near the end of December, 2014, the homeowners were sent the proposed budget for our fiscal year which begins March 1. 2015 and ends February 29, 2016. The President of the Board, George Pauley sent a cover letter with the budget highlighting the categories which would increase in the new fiscal year.
Because so many owners are unable to attend the meetings held to discuss the budget, as the Budget and Finance Committee Chairman, I felt I would try to give you a better understanding of how choices were made to propose increases to the various categories.
In late September, the Budget & Finance Committee received a draft of the proposed budget from Management. We held six meetings with Management to review the proposed budget and one with the Board, Management and the Committee. At the meeting with the Board we reviewed all proposed changes the B&F Committee recommended to the original proposed budget.
At the time we started our review of the proposed budget, we knew we would be facing several unknowns outside our control and it would be a challenge coming up with a budget keeping Park Tower on sound financial ground. Some unknowns included labor contracts not yet finalized, possible fee and tax increases being considered by the City Council of Chicago such as parking taxes, water and sewer rate increases, and even now there continues to be talk about changing the city’s position on mandated fire safety requirements and sprinklers.
Weather is always a factor playing havoc on a budget; is it going to be extremely cold as it was in 2013, or would we have a more normal winter as we seem to be having this year? On top of all that, the Board commissioned the updated Reserve Study, which we had not yet received and can impact how much we contribute to the reserves each year.
The goal of the B&F Committee is always to keep increases at a minimum while still doing all of the maintenance to keep Park Tower safe and protect our investment. While considering each budget category, we do try to spread any proposed increases to residents using the services, including those who do not own a unit. Thus helping to keep any proposed assessment increases lower.
The first item the B&F Committee recommended to increase were the parking rates. The City Council passed a 2% parking tax increase which affects parkers for the various mall businesses and their guests.
Also in this category, the contract with the union was finalized and resulted in a 3% increase in garage payroll in addition to a 5.5% increase in benefits. (Payroll and benefits are about 72% of the total projected garage expenses.)
Because of this the B&F Committee felt the parking charges for Self Parkers, Valet Parkers, Tandem Parkers and reserved parkers should increase by $5 per month. These increase were the first for most of these categories in several years. We analyzed parking rates at several buildings in our neighborhood and found ours to be reasonable – even on the lower end after the increase.
We realize Valet Parking was increased last year, but the reasons have been beyond our control: the fact that valet parking uses significant manpower, and the way the City increased its taxes for those non-resident owner parkers. So two years in a row now, we have been hit with higher taxes.
The second category increased for next year was the laundry room fees. Management recommended a .25 increase for all machines because of the increase in labor and utility rates over the past several years. While the City of Chicago has more than doubled its water and rates – and plans to do so again over the next couple years, Park Tower has not increased this category since 2006. We could not ignore it this year. This facility is used by both owners and tenants, so it is a shared expense.
The third category we recommended increases to was our health club rates. The membership rates have not been increased since 2013 and the B&F Committee felt the discounts granted for double and family were too large. As indicated earlier the City of Chicago has increased water rates and this was part of our reason for increasing these fees. We are aware the Health Club Committee will be making recommendations to the Board for some improvements, but at the time we finished our budget review, we did not yet have any recommendations to consider. Again, this facility is used by both owners and tenants, so it is a shared expense.
The final increase proposed was to the Assessments which determines the amount we will contribute to the capital reserves for the projects included in the proposed budget as well as those for the future.
In November we received the new Reserve Study and held a meeting to discuss the impact it might have on the level of the contributions we were currently making and planned to make in the future. I can happily report that our contribution rates were close to those recommended in the study which was good news because we could stay with our long range plan projections. As we have reported in the past, the Committee’s goal has been to limit assessment increases to 3.5% and still meet our future expected capital expenditure needs. Based upon the Reserve Study, the Committee felt we were on the right track, with contribution rates meeting projected future expenditures.
I hope this article clarifies for you why increases were proposed in the categories we identified and our logic behind those increases. If you have any questions for the B&F Committee, feel free to forward them to Management, with the best method to contact you for response.
by Paul Groeninger
Paul Groeninger chairs the Budget and Finance Committee.